Doubly sweet in that it was a Roth IRA. Not only free money, but tax-free free money that will grow tax-free.

I have mentioned bonuses in the past on individual threads, but I thought it might be good to have a central thread where people can share their experiences, tips on brokerages with offers, and questions about the ways and means. I shamelessly ripped off the "Final Definitive" forum meme.

Brokerage bonus program use is the second greatest thing that I have read on this forum.

I've been a bit busy, so I'm behind this year, but I'm in the process of cycling through some available assets to get a new set of bonuses.

Here's a mini-FAQ.

1. Won't my money be out of the market during these transfers?Almost all brokerages support ACATS transfers, so you can move the assets in-kind, and they stay invested the whole time. It does take a week or two complete the process, so you shouldn't trade the assets.

2. You get like at most $1000 for transferring $250k. That's not a very good return on your money is it?But it's not a return. This isn't like a bank deposit bonus, where you have to put in cash and take whatever interest rate the account generates. As mentioned above, the assets transfer in-kind, so you have the same investments. The money works as hard as it ever did, there's just a bit more.

3. Can I transfer any assets?Not always. A problem can be Vanguard Admiral index funds. Some places won't accept them, others will, but not allow you to buy more. ETFs work great for this, as you get the best ERs and can move them around freely. You also frequently get some free transactions you can use with ETFs. If you are at Vanguard, there's a tax-free exchange from mutual fund to ETF where both classes are available. Edit: There are a few bond index funds that handle dividends differently, so no conversion so the ETF class is allowed.

4. How long do I have to leave my assets?It varies. Some as long as 12 months, some as little as 90 days. Check the terms and conditions.

5. Isn't it a LOT of work?Not really. The process depends a bit on the particular brokerages involved. About the worst case is needing to create a new account online (not hard) then downloading a transfer form that needs to be filled out, signed, and faxed or mailed. Some make it easier, allowing you attach the form to a secure message or even allowing you to set up the transfer completely with a web form. It takes about the same time to move 50k as it does 500k, so the bigger your accounts the better.

6. Don't these brokerages have fees when you leave?Some do. Many don't charge if you do a partial transfer, so you can leave a bit of cash to avoid the fee. Also, some receiving custodians will cover transfer fees even if it's not listed in the offer. Ask and see. You can use the policies in deciding which to use. You don't want your bonus wiped out! Here's a source for fee comparison, but check yourself:http://www.brokerage-review.com/findbroker/acat-account-transfer-fees.aspx

7. Won't this complicate my portfolio?That depends. If you want, you can just use your taxable and Roth IRA accounts as units, and only move those around. Generally you'll make more money if you're willing to split and recombine on occasion. Example, if you have 350k, you'd be better off splitting the account and getting a bonus for 100k from one and for 250k from another.

8. What about taxes?Non-IRA bonuses are taxable. Some custodians include any on your 1099, some only if it's $600 or more. You still owe regardless. IRAs bonuses have no taxes due at the time, and Roths never will. Check the terms on IRAs. Most custodians count the bonus as interest. Some want to mark it as a contribution (BOO!) or pay it outside of the IRA (boo). That's rare, and can be avoided. Check those terms!

9. Where do I find these offers? A good source is: http://www.hustlermoneyblog.com/best-brokerage-bonuses/You can also search online for other sources. When you have those small leftover accounts, sometimes the custodian will send you a targeted offer that is better than their public one.

I love the brokerage bonuses, I am awaiting AA miles from Fidelity as I type this, but one question about the bonuses on Roth IRA funds: how can they make a contribution to your account in Roth form? This would seem to circumvent contribution limits? I could understand them giving you $1000 into your brokerage account and 1099ing, but if the funds go in Roth form with no tax owed it just seems sketchy. Can anyone point to IRS info or legislation that clarifies things?

A $1,000 interest payment on a $250,000 deposit is a mere 0.4%, so a $1,000 bonus going into a Roth is just called interest earned. I don't see why that would be an issue at all, since it would not be a Roth contribution in any case.

This reminds me of credit card surfing in the days when you got 0% interest for a time after a balance transfer. Back in the 1970's, banks offered incentives for opening an account at their bank. You could get such things as toasters. If you know how to work this, I say go for it. The window for this will close at some point as really good deals never last.

livesoft wrote:A $1,000 interest payment on a $250,000 deposit is a mere 0.4%, so a $1,000 bonus going into a Roth is just called interest earned. I don't see why that would be an issue at all, since it would not be a Roth contribution in any case.

But what underlying investment would be earning the interest? If I xfer $250k, but all $250k is an in-kind already in <insert index fund here> then what are they claiming generated the interest?

Strayshot wrote:I love the brokerage bonuses, I am awaiting AA miles from Fidelity as I type this, but one question about the bonuses on Roth IRA funds: how can they make a contribution to your account in Roth form? This would seem to circumvent contribution limits? I could understand them giving you $1000 into your brokerage account and 1099ing, but if the funds go in Roth form with no tax owed it just seems sketchy. Can anyone point to IRS info or legislation that clarifies things?

I don't recall seeing any IRS publication that addresses the question one way or the other. I would assume that large brokerages like TD Ameritrade, Fidelity, etc. would have smart tax lawyers on staff that have reviewed the question and decided that they don't need to report the bonus as a contribution.

Earl

This week's fortune cookie: "The stock market may be your ticket to success." I sure hope so!

Earl Lemongrab wrote:3. Can I transfer any assets?Not always. A problem can be Vanguard Admiral index funds. Some places won't accept them, others will, but not allow you to buy more. ETFs work great for this, as you get the best ERs and can move them around freely. You also frequently get some free transactions you can use with ETFs. If you are at Vanguard, there's a tax-free exchange from mutual fund to ETF where both classes are available.

You forget to mention that many Vanguard funds - Admiral or not - do not have ETF classes at all. For example, the municipal bond funds, or the high-yield corporate bond fund.

Earl Lemongrab wrote:If you are at Vanguard, there's a tax-free exchange from mutual fund to ETF where both classes are available.

You forget to mention that many Vanguard funds - Admiral or not - do not have ETF classes at all. For example, the municipal bond funds, or the high-yield corporate bond fund.

Well, I did say, "where both classes are available." Obviously, if there's no ETF then you can't convert to it. I believe that non-index Admiral shares can be purchased outside of Vanguard, but I'm no expert on that.

Earl

This week's fortune cookie: "The stock market may be your ticket to success." I sure hope so!

As far as I know, the $1000 offer from Merrill Edge is not currently available. It will probably come back. TD Ameritrade has an offer with that reward level, but you need 250k rather than the ME 200k.

Earl

This week's fortune cookie: "The stock market may be your ticket to success." I sure hope so!

Have you seen this by Betterment? I don't recommend them or know much about them, but this site recommends against going to Merrill Edge despite a bonus. I looked at a couple of other brokerages and it was not clear that the bonus would be put in a taxable or IRA account. Merrill Edge specifically put the bonus in the IRA. My old brokerage may have changed their policy and I won't name which one I dealt with at the time, but I could not get them to put the bonus in the IRA.

I thought the bonus placement in taxable was because of tax rules, but apparently that is not true or the law has changed.

Transfer of an ira to fidelity last year resulted in bonus going into the IRA. I thought that was normal but will research to make sure it will happen before transferring to td ameritrade this year, thanks to bogleheads.

Even if the net for a small account is $50, that's still more than zero. Merrill Edge does not charge for partial transfers, so as far as I know you could leave $5 and send the rest somewhere else.

The article was focused on who you trust to manage the account more. Well, that's easy. I'm the only one I want to manage it. That's perfectly possible at Merrill Edge, but I don't think Betterment has a self-managed option (someone can correct me if that's wrong).

As noted in previous messages, these bonuses work better as you scale up. Transfer fees are typically the same regardless of account size, but the bonuses get bigger.

As to the point that they offer you the bonus because they hope you'll spend more money on something else, that might be true but why would I care? I buy the loss-leader sales at the supermarket too.

Earl

This week's fortune cookie: "The stock market may be your ticket to success." I sure hope so!

Thanks to the OP for the link to brokerage bonuses. I just spoke with Fidelity regarding their $2500 cash bonus on transferring $1,000,000. Not only is that true but the rep said he could probably get me $3750 if I transferred my entire IRA. He said he just had to get approval from a supervisor.

Last edited by Trader/Investor on Sat Oct 01, 2016 1:59 am, edited 1 time in total.

Earl Lemongrab wrote:3. Can I transfer any assets?Not always. A problem can be Vanguard Admiral index funds. Some places won't accept them, others will, but not allow you to buy more. ETFs work great for this, as you get the best ERs and can move them around freely. You also frequently get some free transactions you can use with ETFs. If you are at Vanguard, there's a tax-free exchange from mutual fund to ETF where both classes are available.

You forget to mention that many Vanguard funds - Admiral or not - do not have ETF classes at all. For example, the municipal bond funds, or the high-yield corporate bond fund.

mac808 wrote:Is the $1000 promo still active for Merrill Edge? I only see $600 on their website.

$600 is for a $250k transfer, you can negotiate more if you transfer more. I did.

They have the $1000 for a 200k transfer off and on. That's the one I just completed. Right now it's off.

Earl

Sometimes both the $600 and $1000 offers are simultaneously ON but you need make sure that you search for the link with the bigger bonus and set up the transfer from that link.

I got $1,000 in my Roth for transferring $200K in Roth assets for six months AND another $1,000 bonus for transferring $200K in taxable assets there for six months. (The Roth bonus was tax free but the taxable account bonus will be ordinary taxable income.) No strings attached to any of this and all kinds of Platinum Preferred bonuses (additional cash back on credit cards, free alien ATM use, free wire transfers, free safe deposit box, 100 free trades per month, etc.) too. (Note that only $100K in assets is required to maintain those other bonuses that come on top of the thousand dollar cash bonuses.)

In addition, a Merrill rep called me to tell me that she has (apparently unpublicized) authority to give me additional bonuses up to $2,500 for additional transfers. Unclear if there would be any strings attached to that, but certainly no gotchas to what I have done thus far.

Everything has gone swimmingly. I did the Roth transfer back in Sept 2014 (bonus paid in March 2015) and the taxable transfer in Dec 2015 (bonus paid in June 2016). These are basically just buy-and-hold Vanguard ETFs sitting at Merrill Edge instead of at Vanguard.

livesoft wrote:A $1,000 interest payment on a $250,000 deposit is a mere 0.4%, so a $1,000 bonus going into a Roth is just called interest earned. I don't see why that would be an issue at all, since it would not be a Roth contribution in any case.

But what underlying investment would be earning the interest? If I xfer $250k, but all $250k is an in-kind already in <insert index fund here> then what are they claiming generated the interest?

Good question. They are rewarding you for holding your securities there, so I guess in theory they could be generating at least a bit of money lending your ETFs to short sellers.

dodecahedron wrote:Sometimes both the $600 and $1000 offers are simultaneously ON but you need make sure that you search for the link with the bigger bonus and set up the transfer from that link.

The $600 offer is always on. The link for the $1000 offer right just redirects to that one.

All in all, Merrill Edge is the best deal when that offer is available because of the extras you mention, plus slightly lower required amounts with shorter holding periods. Things can and likely will change.

Earl

This week's fortune cookie: "The stock market may be your ticket to success." I sure hope so!

dodecahedron wrote:Sometimes both the $600 and $1000 offers are simultaneously ON but you need make sure that you search for the link with the bigger bonus and set up the transfer from that link.

The $600 offer is always on. The link for the $1000 offer right just redirects to that one.

All in all, Merrill Edge is the best deal when that offer is available because of the extras you mention, plus slightly lower required amounts with shorter holding periods. Things can and likely will change.

Earl

How often does the $1K offer come online? Is it fairly regular, or only once a year?

I have been thinking about this for years now, but was always scared that something might go wrong. My accounts are all tax-deferred, so there should be no tax implications. It seems like really easy way to make some extra money. Thanks for starting the thread, I might actually do it this time.

I transferred my Roth-IRAs from E*Trade to Vanguard a while ago, also converted a Fidelity 401k to a Vanguard tIRA. I use admiral funds, of course, but could easily go the ETF route. E*Trade never closed my IRAs, I even have an old tIRA with them (with nothing on it). So I guess it should be easy to initiate such transfer. Now the biggest account is a little under 500k. If I were to combine with the Roths, I reach the limit to qualify for the $1200 bonus, which seems attractive. Anybody has past experience like that (combining accounts for extra bonus)?

Now what bugs me is that my taxable account (the bulk of our savings) is already at E*Trade, and I just don't like to put all my eggs on what I perceive as being a fragile basket... Even accounting for FDIC insurance, this makes me itchy...

siamond wrote:I transferred my Roth-IRAs from E*Trade to Vanguard a while ago, also converted a Fidelity 401k to a Vanguard tIRA. I use admiral funds, of course, but could easily go the ETF route. E*Trade never closed my IRAs, I even have an old tIRA with them (with nothing on it). So I guess it should be easy to initiate such transfer. Now the biggest account is a little under 500k. If I were to combine with the Roths, I reach the limit to qualify for the $1200 bonus, which seems attractive. Anybody has past experience like that (combining accounts for extra bonus)?

Now what bugs me is that my taxable account (the bulk of our savings) is already at E*Trade, and I just don't like to put all my eggs on what I perceive as being a fragile basket... Even accounting for FDIC insurance, this makes me itchy...

How much do you have that's not at Etrade already? Enough for the $1200 bonus? You can (and I probably would) move the taxable from Etrade to say TD Ameritrade and get a bonus there. Two birds and all that.

BTW, FDIC doesn't apply here unless all your holdings are in a cash account with that.

Earl

This week's fortune cookie: "The stock market may be your ticket to success." I sure hope so!

Over the last couple of years, I've transferred from Scottrade to Capital One (partial transfer) and then back to Scottrade (full transfer). I've done in-kind transfers of Vanguard ETFs so have stayed invested throughout the process. Scottrade didn't charge a fee to transfer to Capital One since it was a partial transfer; I kept the Scottrade account open with a few shares. I'm not sure if they still have the same policy but Scottrade didn't use to charge for partial transfers a couple of years ago. The following year, I transferred back the entire balance to Scottrade and was charged an account closure fee of $75 by Capital One. I printed out a statement showing the fee and gave it to Scottrade. They reimbursed me fully. This was in Roth IRA accounts for both my wife and me and we received bonuses from each brokerage after doing the transfers. Trades were not conducted at Capital One so there were no transaction costs. We get some free trades at Scottrade each year so do conduct a few transactions there but don't pay any out-of-pocket transaction costs there either. The process was easy with both Scottrade and Capital One and we will likely transfer again out of Scottrade next year for another bonus.

I also opened a brokerage account with TradeKing last year. They were offering a $200 bonus at one point for depositing $3k into a brokerage account. 3 trades at a cost of $5 per transaction were required. I transferred $3k from my emergency fund at Ally Bank and bought 3 shares (1 share at a time) of Vanguard Short Term Bond Fund. The rest of the money was left in cash at Tradeking. Then, after a few months, I sold the 3 shares all at once and transferred the balance to Ally. A couple of months after that, I closed the Tradeking account. So the net was $180 but this was taxable. Tradeking made the process of establishing an account difficult. They seemed to be overly-cautious about security and we had to scan and send them various forms of identification. All in all, I don't think it was worth it for a taxable $180.

You generally have to keep the new account for a set time period so it's important to read the fine print carefully.

Ron Ronnerson wrote:I also opened a brokerage account with TradeKing last year. They were offering a $200 bonus at one point for depositing $3k into a brokerage account. 3 trades at a cost of $5 per transaction were required. I transferred $3k from my emergency fund at Ally Bank and bought 3 shares (1 share at a time) of Vanguard Short Term Bond Fund.

I had jumped on the TradeKing offer as well. However, I bought about 3k worth of an ETF from my asset allocation in three transactions (three separate limit orders at the same price).

Unfortunately, TradeKing has dropped that offer and now only has free trades. Too bad, as that used to be a good one for people with smaller amounts to transfer.

Earl

This week's fortune cookie: "The stock market may be your ticket to success." I sure hope so!

siamond wrote:I transferred my Roth-IRAs from E*Trade to Vanguard a while ago, also converted a Fidelity 401k to a Vanguard tIRA. I use admiral funds, of course, but could easily go the ETF route. E*Trade never closed my IRAs, I even have an old tIRA with them (with nothing on it). So I guess it should be easy to initiate such transfer. Now the biggest account is a little under 500k. If I were to combine with the Roths, I reach the limit to qualify for the $1200 bonus, which seems attractive. Anybody has past experience like that (combining accounts for extra bonus)?

Now what bugs me is that my taxable account (the bulk of our savings) is already at E*Trade, and I just don't like to put all my eggs on what I perceive as being a fragile basket... Even accounting for FDIC insurance, this makes me itchy...

Earl Lemongrab wrote:You can (and I probably would) move the taxable from Etrade to say TD Ameritrade and get a bonus there. Two birds and all that.

I don't want to make it complicated. The more I think about it, I don't like the idea of moving my IRAs out of Vanguard (stable, admiral funds, etc), while I am intrigued by your idea of using part of my taxable account at E*Trade (say move $500k to Scottrade). And then, within a year, with a bit of luck, E*Trade will be happy to welcome me back with another similar bonus. There is a $75 outgoing transfer fee though.

I pondered about rebalancing, TLH and increased tracking time, but one more account isn't going to make it that much more complicated, and I'll get a few free trades at Scottrade anyway. I just wish they'd align their $500k bonus with E*Trade... Just need to mull over a bit more to decide if it's worth the bother.

Anybody having practical experience to share, moving in or out of Scottrade?

I find that one to be tedious and poorly laid out, but to each their own.

I don't want to make it complicated. The more I think about it, I don't like the idea of moving my IRAs out of Vanguard (stable, admiral funds, etc), while I am intrigued by your idea of using part of my taxable account at E*Trade (say move $500k to Scottrade). And then, within a year, with a bit of luck, E*Trade will be happy to welcome me back with another similar bonus. There is a $75 outgoing transfer fee though.

$25 for partial transfers from Etrade. Frankly, Scottrade is near the bottom of brokerages that I have used. If not going with the top money offer (TD Ameritrade) I would transfer to Merrill Edge.

Earl

This week's fortune cookie: "The stock market may be your ticket to success." I sure hope so!

Earl Lemongrab wrote:$25 for partial transfers from Etrade. Frankly, Scottrade is near the bottom of brokerages that I have used. If not going with the top money offer (TD Ameritrade) I would transfer to Merrill Edge.

No way I would *ever* be associated with anything named Merrill-something... Even to get their free money...

TD Ameritrade's offers seem to stop at $200k and $600. This is the only reason for which I was thinking Scottrade. Unless you know better?

(thanks a lot for sharing your experience, by the way, much appreciated)

Earl Lemongrab wrote:$25 for partial transfers from Etrade. Frankly, Scottrade is near the bottom of brokerages that I have used. If not going with the top money offer (TD Ameritrade) I would transfer to Merrill Edge.

No way I would *ever* be associated with anything named Merrill-something

Merrill Edge is the old Bank of America discount brokerage, renamed after they bought Merrill Lynch. They've been one of the best discount brokerages that I have used. But you have to make your own choices of course.

TD Ameritrade's offers seem to stop at $200k and $600. This is the only reason for which I was thinking Scottrade. Unless you know better?

leonard wrote:I doubt the IRS allows an extra $1k to go in to an IRA without it effecting your contribution limits.

Well, I have received a number of these bonuses over the years. None have been reported to the IRS as a current year contribution. Fidelity even has a program where they put a match to IRA contributions in the account, with examples showing full contributions + matching.

leonard wrote:Also, I bet Merrill has a plan for recouping the $1k, plus. I'd never trust Merrill in any way with my money ever again, not for any Xfer bonus.

I have received bonuses from Merrill Edge and then transferred out the money following the retention period. They work just like any of the others (although with better retention periods than most). What exactly do you think that they will do?

Also, Merrill Edge is not Merrill Lynch. When BofA bought ML, they renamed their existing discount brokerage to Merrill Edge. Edge has been one of the best brokerages that I worked with. Besides a good bonus program, the Preferred Rewards for my level has paid off well.

Earl

This week's fortune cookie: "The stock market may be your ticket to success." I sure hope so!

I thought it might be good to have a central thread where people can share their experiences, tips on brokerages with offers, and questions about the ways and means. I shamelessly ripped off the "Final Definitive" forum meme.

As the self-appointed arbiter of what really a "final, definitive" thread, I do have to note that a thread cannot qualify until somebody is called an "idiot." Let's step up folks.

In more seriousness, I did have a follow up question to:

Edge has been one of the best brokerages that I worked with. Besides a good bonus program, the Preferred Rewards for my level has paid off well.

I'm curious if there are other ways that make them the "best" aside from providing free stuff (e.g. customer service, tax reporting, trade executions etc.)? It's a bit of a side question, but worth asking since they are often promoted as a great transfer candidate because of the transfer bonus and the additional bonuses of being in preferred rewards.

Earl Lemongrab wrote:I don't recall seeing any IRS publication that addresses the question one way or the other. I would assume that large brokerages like TD Ameritrade, Fidelity, etc. would have smart tax lawyers on staff that have reviewed the question and decided that they don't need to report the bonus as a contribution.

I'm sure they all have smart tax lawyers, but some appear to have come to different conclusions. Fidelity posts their bonus as a contribution. This is problematic if you are transferring a Roth but are ineligible to directly contribute to a Roth due to income.

I'm not sure what you would do in that case. You would need to withdraw the overcontribution. It would then become taxable, presumably, somehow. But I'm not sure how would you report that income as taxable.

My inclination is to steer clear of such transfer offers that post the bonus as an IRA contribution.

They didn't on my account. They still say I can contribute the full $5500. The bonus I got was listed as a "commission credit".

I don't think they could do it as a "contribution" in general, because they give the bonus to people totally ineligible to contribute (e.g., folks over 70 1/2 with rollover balances in a traditional IRA, or folks with no current year earnings.)

I would love to have more information on how these "bonuses" are going in to Roth accounts based on some regulatory guidance if anyone can find it. If it isn't a contribution and isn't a gain/interest on held securities, than what is it and how can it enter the Roth form?

Until then though, I am excited to hear of yet another "backdoor" via brokerage transfers

If you're looking for an IRS rule that says, "A custodian can add money to an IRA and it will not be a contribution" then I don't think anyone will be able to help. As I said, several large brokerages with lots of legal talent on staff have decided that it is acceptable (probably with buy-in from the IRS) so I won't spend a lot of time worrying about it. You'll have to make your own decision.

stlutz wrote:As the self-appointed arbiter of what really a "final, definitive" thread, I do have to note that a thread cannot qualify until somebody is called an "idiot."

Which idiot made up that criterion?!

stlutz wrote:I'm curious if there are other ways that make them the "best" aside from providing free stuff (e.g. customer service, tax reporting, trade executions etc.)? It's a bit of a side question, but worth asking since they are often promoted as a great transfer candidate because of the transfer bonus and the additional bonuses of being in preferred rewards.

Well, hmmm. I'll try, but frankly the free stuff is what's most important to me. Money is tangible.

I don't have an answer for the execution question. I don't buy stuff all that often, so all I can say is that I haven't had any problems. I'm not Livesoft, so I don't try to meter my transactions.

Customer service has been solid. They usually have a local rep reach out when a new account is started, so you can funnel questions/problems there or use the secure message system. On my most recent transfer the local guy was able to authorize an extra $75 to cover transfer fees in addition to the bonus.

For transfers, they have it set up to where most accounts can be transferred with a web form. This makes it really easy. The only other one that I recall that does that is Etrade, but I might be misremembering.

Earl

This week's fortune cookie: "The stock market may be your ticket to success." I sure hope so!